Despite economists predicting a “doom and gloom” slump for New Zealand’s property market, house prices continue to rise in some areas, defying the odds and reconfirming real estate’s strength as a solid investment. For first home buyers looking to enter the market, now may be the best time, with record low interest rates, no loan-to-value restrictions (LVR) and regional fluctuations in house prices. As always though, it’s important you place yourself in the best possible position to move quickly on a deal. Here’s how to do that.
New Zealand’s Property Market Remains In Good Shape
Not even a global pandemic seems able to stop our love of real estate! Following a slow-down of the New Zealand property market during the first wave of COVID-19 and earlier lockdown, REINZ figures show sales volumes are up year on year in June 2020.
REINZ Chief Executive, Bindi Norwell said, “Auctioneers are reporting competitive bidding resulting in strong price outcomes for vendors, and the total percentage of auctions exceeded the proportion of auctions we saw last June.”
It seems the hard and fast lockdown, while initially resulting in a sharp drop of new listings coming to market, led to a quicker recovery and overall increased demand amongst buyers once COVID-19 was eliminated earlier this year.
Part of this demand appears to be driven by the large number of Kiwis returning to live in New Zealand, resulting in much tighter inventories and more competition in market. Add to this the record low interest rates and the removal of loan to value restrictions by the Reserve Bank earlier this year, and it’s clear New Zealand’s property market remains in good shape.
“We've got a lot of factors supporting the market,” says Norwell.
“There have been low interest rates, and wage subsidies, which have been helping people pay mortgages and rent. And we’ve also had mortgage holidays.”
“We've had a lack of listings coming onto the market, and that's put more pressure and more competition on those properties that people want, which has bolstered the price.”
Buying Property Post-Covid
Much interest in the property market has come from first home buyers, with many taking advantage of the Reserve Bank’s lifting of the 80 per cent loan to value restrictions on mortgage lending. It’s given this group of potential homeowners a 1-year respite and a window of opportunity to get a mortgage without having to raise a 20 per cent deposit.
Of course, lender’s restrictions remain in place and it’s vital first home buyers place themselves in the best possible position to ensure a successful mortgage application. Here are some first home buyer tips from Mortgage Express advisers:
- Save as much as you can for a deposit: Remember that every dollar you save means a dollar you won’t have to borrow, or pay interest on.
- Factor in any Government support if it’s applicable: Check your eligibility of Government products like KiwiSaver First Home Withdrawal, KiwiSaver HomeStart Grant, or a First Home Loan.
- Clear your debt and draft a realistic budget: While a small amount of debt can help improve your credit score, it’s more important that you pay down your debt on time each month to maintain a good credit score.
- Be realistic in your expectations: You may need to lower your expectations and even consider exploring areas that wouldn’t necessarily be on your list.
- Do your research: Check online for similar properties and compare features to determine a realistic offer. Ensure you have building inspections and valuations done before committing to a purchase.
- Talk to the right people: Before you even start looking for a home, we recommend you meet with a Mortgage Express adviser to discuss things like your deposit, how much you can afford, how much you could borrow, as well as other costs to factor in to your budget.
What Can We Do For You?
When it comes to providing professional advice around buying a first home or investment property, refinancing or refixing your home loan, it’s important you work with someone who understands the New Zealand market and has access to a variety of lenders so you have more choice.
At Mortgage Express, our mortgage advisers have experience in the ever-changing property market, regulations, and lending environment and can help you gain a clearer understanding of the rules and processes involved in securing a mortgage.
What’s more, because we work with a panel of bank and non-bank lenders, we have access to more competitive interest rates and a keen understanding of banks’ appetites when it comes to lending to first home buyers.
Contact our team today by completing this form and one of our advisers will be in touch to arrange a meeting time.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.
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